Via Dave Lutz at JonesTrading, here’s a super quick guide to what traders are talking about before the markets open on Wednesday:
Good Morning! US Futures are trying to rebound from yesterday’s weakness, with the S&P gaining roughly 40bp early. This is following a decent session (so far) in Europe, with the DAX up 1% as VW rallies back from an initial hit of 7% early, but the 3% bounce feels of the “dead-cat” variety as headlines are sure to worsen. The FTSE is outperforming all, gaining 1.4% as the miners stage a recovery — with all focus on Glencore rallying 3%. Turnover across the continent is pretty decent, with the major exchanges trading 30% heavier than normal despite the thin desks due to Yom Kippur. Thanks to China’s Caixin flash PMI coming in light, we have a sea of Red over in Asia — with Shanghai losing 2.2%, Taiwan and Korea 2% lower, while Aussie was hit for over 2% as mining groups weighed heavy. Emerging Markets are looking a bit sloppy with all (except India) firmly red — the EEM is looking at its 5th straight decline to start today. The Nikkei remained closed for Holidays, Japan trades for the 1st time this week tomorrow.
As Bund yields bounce off one-month lows, the US 10YY continues to get legs off the 200dma (7th successful hold in a week) — which bodes well for equities early as intraday charts of the S&P and 10YY mirror each-other of late. The $US is weaker as EU PMI sees its best quarter in 4years — which combined with VW not collapsing again has the Euro bid higher ahead of ECB President Draghi’s appearance at 9 a.m. ET. Leverage is being embraced as the Yen breaks down a bit — but keep an eye on those EM Currencies – Indonesian rupiah, Malaysian ringgit and the South African rand continue to be under pressure — while the Aussie $US heads lower on bleak China data. The weaker $US is a tailwind for commodities, and we have a bid almost across the board. Copper is trying to bounce from 3week lows, all the softs are bid higher, and the Oil complex is showing a tepid 1% bounce as API inventories show a draw 3x what the street was expecting.
Catalysts on this first day of autumn get started with the Draghi at 9am, Markit US Manufacturing PMI at 9:45, ahead of the DOE inventory data at 10:30 (Estimates are for a draw of 1.25M, but API showed a 3.68M draw last night). ECB’s Weidmann Speaks at Noon, and Fed’s Lockhart Speaks on Economy at 12:30. The US Treasury is selling $US35B in 5Y notes at 1pm. Down in Washington, the Senate and House are not in session (but expect headlines trying to avert a shutdown), while President Obama and VP Joe Biden meet with the Pope at White House at 9:15.
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